Rabobank survey: Farmer confidence lifts but still negative

Sheep and beef farmers have seen demand for their products lift in recent months. Photo / Stephen Jaquiery

Improved sentiment among sheep, beef and horticulture producers is reflected in farmers' confidence lifting for the second consecutive quarter but it still remains in negative territory, the latest Rabobank rural confidence survey has found.

The survey, completed last month, found net farmer confidence lifted to -2 per cent, up from -9 per cent in March.

Improving demand was the key reason cited by farmers expecting the New Zealand agricultural economy to improve, while concern over government policy was the main concern for those with a pessimistic outlook.

Sheep and beef farmers had seen demand for their products lift in recent months, largely due to the African Swine Fever outbreak which had crippled Chinese pork production and created new opportunities for red meat producers in the Chinese market, Rabobank New Zealand chief executive Todd Charteris said.

Horticulturists had also seen demand strengthen over the last quarter, as imports grew in a host of export markets, particularly for kiwifruit and apples, Charteris said.

Among farmers with a pessimistic view of the agricultural economy, 72 per cent cited government policy as cause for their negative outlook on the next 12 months. That was back marginally on the 75 per cent who held that concern last quarter.

"Since the last survey, we've seen the Government categorically rule out introducing capital gains tax, with this likely to have come as a relief to most in the agricultural sector, Charteris said.

"However, we've also seen the Government recently introduce the Zero Carbon Bill proposing ambitious targets for gross methane reductions without the ability to use on-farm planting to directly offset these reductions. And this is a concern for some farmers."

ASB's latest Farmshed Economics report said beef prices were "poised to surge" over the remainder of 2018.

As measured by the Agrifax beef index, prices had lifted nearly 7 per cent over the three months since the report's last edition.

The bank expected P2 steer prices might challenge the $6kg mark over the spring and might even test the record highs set in 2016.

The latest analysis from the Meat Industry Association showed New Zealand exported a record volume of beef to China in a single month in May.

More than 21,500 tonnes of beef, worth $155.7million, was dispatched to China in May as beef exports to the country continued to grow strongly.

The value of sheepmeat exports to the United States was also strong. In the first five months of 2019, the volume of sheepmeat exports to the US grew by 1 per cent, but the value of these exports increased by 20 per cent.

The average FOB value for sheepmeat exports to the US in May was $20.08/kg compared to an average FOB value to the UK of $9.38/kg.

Meanwhile, there was a 42 per cent drop in the volume of sheepmeat exports to the UK and a 39 per cent decrease in value in May compared to May 2018.

China remained the largest market by value for red meat and co-products, with $329.4 million exported to the country, followed by the US and Japan.

New Zealand exported more than $912million of red meat and co-products to global markets in the month of May.